1 3 Innovation Kirschbaum


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1 3 Innovation Kirschbaum

  1. 1. How mid-sized players can out-innovate big pharma Bernd Kirschbaum at INSEAD Healthcare Alumni Summit, October 8, 2009
  2. 2. Contribution of big pharma to the industry innovation decreased over time Annual new drug approvals [%] Pharma implications Source: Johnston Blakely & Company biotechnology report 2009 59 1997 43 58 1998 51 49 1999 58 42 2000 39 61 2001 2006 41 48 52 2002 74 2005 71 29 2003 33 67 84 16 2004 26 100% <ul><li>Approval of drugs per year showed declining trend </li></ul><ul><li>The output by large pharma companies declined dramatically over past decade </li></ul><ul><li>Contribution to innovation shifted from large pharma companies to biotechs and specialty companies </li></ul>39 21 45 41 31 33 38 43 40 49 # of drug approvals Bio / specialty pharma Large pharma
  3. 3. Advantages and Disadvantages of Mid-Sized Companies <ul><li>Can not compete on scale </li></ul><ul><ul><li>Manpower </li></ul></ul><ul><ul><li>Financial power </li></ul></ul><ul><ul><li>Global reach </li></ul></ul><ul><ul><li>Number of therapeutic areas </li></ul></ul><ul><ul><li>covered </li></ul></ul><ul><li>Must be more resourceful and </li></ul><ul><li>need to work in networks </li></ul><ul><li>Adapt to new requirements </li></ul><ul><li>and trends better and faster </li></ul><ul><ul><li>less dependence on </li></ul></ul><ul><ul><li>blockbusters </li></ul></ul><ul><ul><li>more open to new approaches </li></ul></ul><ul><ul><li>(e.g. technologies, personalized </li></ul></ul><ul><ul><li>medicine) </li></ul></ul><ul><ul><li>Less need to play the </li></ul></ul><ul><ul><li>„ numbers game“ </li></ul></ul><ul><li>Keep management incl. board </li></ul><ul><li>closer to content/science </li></ul><ul><li>Easier alignment from discovery to </li></ul><ul><li>the market and simpler governance </li></ul>Major Disadvantages Major Advantages
  4. 4. 1. Aggressive R&D productivity goals + high risk projects 2. Not enough resources managing too many projects plus “cutting corners” 3. Quality of projects decline cycle times increase 4. Increasing attrition rates 5. More projects required to meet same goals Large companies have tried to play an unsustainable numbers game Ensure effective portfolio management but use relevant Key Performance Parameters . . . . “ The Vicious Cycle“
  5. 5. Stay close to science Avoid misjudgment of technologies based on wishful thinking and/or despair Genomics Era Post-Genomics Era
  6. 6. Avoid to work in silos Use internal networking, avoid re-inventing the wheel and share knowledge <ul><li>Cytokines </li></ul><ul><li>Vascularization </li></ul><ul><li>Cell adherence & migration </li></ul><ul><li>Receptors & signaling cascades </li></ul><ul><li>Cell division & survival </li></ul><ul><li>Immunity/ autoimmunity </li></ul>Autoimmune & Inflammatory Diseases Oncology Neurodegenerative Diseases
  7. 7. Constant optimization of a global innovation network Effective use of external scientific and biotech network is essential
  8. 8. Embrace new trends ahead of the bunch: Example “Stratified Medicine” <ul><li>Clinicians: </li></ul><ul><li>Therapy adjustment based on disease and patient characteristics </li></ul><ul><li>Tool to optimize dosing </li></ul><ul><li>Patients: </li></ul><ul><li>More effective & predictive </li></ul><ul><li>treatment options </li></ul><ul><li>Healthcare Systems: </li></ul><ul><li>Better return on healthcare expenditure </li></ul><ul><li>More innovation through products with higher medical value using combination of </li></ul><ul><li>Diagnostics (Dx) and Pharma (Rx) </li></ul>
  9. 9. Stratified Medicine and Pharma Business – An opportunity for mid-size players Improved benefit / risk ratio Opens doors to new indications Higher & faster market penetration Better price and reimbursement Faster, more directed development Smaller target market Higher R&D costs per applicant Complication through Dx testing in practice Business Outcome + -
  10. 10. <ul><li>Focus on People </li></ul><ul><li>as a key competitive advantage </li></ul>